In response to conflict in the Middle East region, the Government announced today that it will implement a diesel subsidy scheme starting tomorrow. Separately, a plan on the provision of a two-month-long discount on liquified petroleum gas (LPG), expected to start at end-May, was also unveiled.

Diesel subsidy scheme

From midnight on April 30 to 11.59pm on June 29, eligible users will receive a price subsidy at $3 per litre, by either purchasing diesel from diesel filling stations operated by specified oil companies or specified distributors, or purchasing diesel from “specified oil companies or specified distributors” delivered for local consumption.

The estimated expenditure will be around $1.8 billion, as approved by the Legislative Council Finance Committee.

The scheme does not apply to diesel used for non-local consumption, resale, and vehicles, vessels and installations of government departments. Diesel used by CLP Power Hong Kong, Hongkong Electric Company and Hong Kong & China Gas Company are not covered by the scheme.

In order to ensure the proper use of public funds and protect users’ interests, the Government has signed agreements with the “specified oil companies or specified distributors”, under which responsibilities and terms have been set out. These arrangements include the Government’s payment of the price difference to the specified oil companies and specified distributors; the requirement for these oil companies and distributors to maintain complete and accurate books and records; the requirement to submit reports to the Government every week, as well as the auditing arrangements upon the completion of the subsidy scheme.

The companies and distributors are required to submit to the Government an assurance report and an audit report prepared by an independent auditor within three months after the end of the subsidy period. In case of breaches, anomalies or abuses, the Government has the right to refuse or withhold payment of the subsidy, as well as to hold the companies and distributors liable. 

LPG fuel subsidy

To alleviate the operating costs of local passenger transport commercial vehicles which primarily use LPG as fuel, and reduce the pressure for fare increases, the Government will provide a fuel subsidy of $0.5 per litre of LPG for taxis, public light buses and school private light buses, for a period of two months. The measure is expected to be implemented within May.

About 16,900 LPG (including LPG-hybrid) taxis, 3,440 LPG public light buses and 170 LPG school private light buses would benefit from the subsidy. The total amount of expenditure involved is approximately $38.4 million, to be paid by means of redeploying the Government’s internal resources.

Under the LPG scheme, oil companies will provide a discount of $0.5 per litre of LPG directly at LPG filling stations for all LPG (including hybrid) taxis, public light buses and school private light buses. No registration or application is required. The Government will reimburse oil companies for the actual amount of LPG subsidies provided under this initiative.